Putting Wealth to Work [Book Review]

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In his latest contribution to the study of American foundations titled Putting Wealth to Work, philanthropy scholar and practitioner Joel Fleishman takes his readers on a grand tour of our civil-society institutions, celebrating the independence and vibrancy of these hallmarks of pluralism, especially focused on the dramatic changes that have influenced the charitable sector since the 1990s.

Ever since 1990 prospective donors appear to be favoring either the creation of a time-limited foundation with a lifespan roughly concurrent with their own or the direct disposition of substantial gifts during their lifetimes without the involvement of a foundation at all.

In his recap of organized philanthropy’s evolution, Fleishman looks favorably on the changing habits of older foundations, as well as new vehicles developed for charitable giving by the new billionaires and others of less wealth.

New Philanthropic Trends

Unlike a number of philanthropy critics, ­Fleishman welcomes with refreshing candor the newer vehicles for giving that serve the wealthy and not-so-wealthy alike. LLCs, like those created by Pierre Omidyar, Mark Zuckerberg, and Laurene Powell Jobs, offer flexibility to make gifts to both nonprofits and for-profits to advance social benefit, and criticisms of such tools are “based on a lack of knowledge about the new possibilities.” Donor-­advised funds offer a wide range of givers both convenience and flexibility and have aggregate payout rates significantly higher than those mandated for private foundations.

Throughout the book, Fleishman remains a staunch defender of private giving and philanthropic freedom. The charitable deduction, he writes, “permits the diverse values of millions of individual American citizens to balance and temper the collective judgment of majorities, as well as elites, about how best to advance the public good.”

He warns those who suggest revisions in the tax code to favor charities serving disadvantaged populations that such a structure would be “challenging analytically” and disruptive to the “richness and complexity” of the charitable landscape.

Giving Compass' Take:
• Fast Company details a report from Bridgespan (published originally on Stanford Social Innovation Review) about how billionaires can make more "big bets" in philanthropy and be more effective with their dollars.
• The report emphasizes the need for patience. Most big bettors give an average of four smaller grants to related initiatives before raising the stakes, so it helps to get the lay of the land first.
• Here's more on how this method works in practice to achieving the Sustainable Development Goals.
Philanthropy’s deepest-pocketed donors often short-change the causes they claim to care about the most. That’s because while the majority of the world’s wealthiest givers have expressed interest in solving complex social issues like poverty, educational inequity, environmental degradation, and human rights abuses, only 20% follow through with funding of $10 million or more to actually try to create some fundamental change.
In philanthropic industry parlance, that reluctance even has its own term: “the aspiration gap.” As Bridgespan partner William Foster, whose nonprofit and philanthropist consultancy coined that term, puts it:
The ambition of philanthropists to put “meaningful amounts of money to move meaningful change into the toughest social problem is as present or more present than ever. The difficulty [for most] is figuring out how to do it.” Many donors simply aren’t aware of all the potential social impact strategies they might deploy.
How to effectively make these so-called “big bets” is a question consuming the philanthropic world today.
Philanthropists may have shied away from advocacy efforts in the past because they envision their names associated with hot-button, perhaps intractable issues like gun control. But there plenty of other substantial, less politicized issues where concentrated donations have made major change, including Dallas billionaire Lyda Hill’s work to address the health crisis of antibiotic resistance that has curbed some livestock-raising practices and changed what’s on the menu at restaurants and in grocery stores.
One largely underused tactic that could prove effective would be to create organizational endowments to cause-related organizations, which could then manage the wealth and distribute annual grants at their discretion.
Read the full article about how billionaires can make more of an impact by Ben Paynter at fastcompany.com.

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